BILL NUMBER: SB 1124	CHAPTERED  07/28/99

	CHAPTER   213
	FILED WITH SECRETARY OF STATE   JULY 28, 1999
	APPROVED BY GOVERNOR   JULY 27, 1999
	PASSED THE SENATE   JULY 15, 1999
	PASSED THE ASSEMBLY   JULY 8, 1999
	AMENDED IN ASSEMBLY   JUNE 30, 1999
	AMENDED IN SENATE   MAY 19, 1999
	AMENDED IN SENATE   APRIL 14, 1999

INTRODUCED BY   Senator Vasconcellos
   (Coauthors:  Assembly Members Alquist, Aroner, Cunneen, Honda,
Lempert, Longville, and Scott)

                        FEBRUARY 26, 1999

   An act to add Section 1633 to the Civil Code, relating to
contracts, and declaring the urgency thereof, to take effect
immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1124, Vasconcellos.  Brokerage contracts.
   Existing law generally describes the requirements for entering
into a valid contract.
   This bill would provide that an application by a prospective
customer to enter into a brokerage agreement with a broker-dealer, as
defined, shall be deemed to be a valid contract if the application
is transmitted by the customer to the broker-dealer electronically ,
is accompanied by the prospective customer's electronic or digital
signature, and is accepted by the broker-dealer.
   This bill would also require an application that is transmitted
electronically to comply with all applicable federal and state
securities laws and regulations relating to disclosures  to
prospective customers, as specified.
   The bill would declare that it is to take effect immediately as an
urgency statute.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 1633 is added to the Civil Code, to read:
   1633.  (a) Notwithstanding any other provision of law, an
application by a prospective customer to enter into a brokerage
agreement with a broker-dealer, which application is transmitted
electronically and is accompanied by the prospective customer's
electronic signature or digital signature as described in
subdivisions (d), (e), (f), and (g), shall be deemed, upon acceptance
by the broker-dealer, to be a fully executed, valid, enforceable,
and irrevocable written contract, unless grounds exist which would
render any other contract invalid, unenforceable, or revocable.
   (b) Nothing in this section abrogates or limits any existing law
that would otherwise apply to contracts governed by this section, or
any theory of liability or any remedy otherwise available at law.
   (c) "Broker-dealer," for purposes of this section, means any
broker-dealer licensed pursuant to Part 3 (commencing with Section
25200) of Division 1 of Title 4 of the Corporations Code or exempted
from licensing pursuant thereto.
   (d) "Electronic" means relating to technology having electrical,
digital, magnetic, wireless, optical, electromagnetic, or similar
capabilities.
   (e) "Electronic record" means a record created, generated, sent,
communicated, received, or stored electronically.
   (f) "Electronic signature" means an electronic sound, symbol, or
process attached to or logically associated with an electronic record
and executed or adopted by a person with the intent to sign the
electronic record.
   (g) "Digital signature," for the purposes of this section, means
an electronic identifier, created by a computer, that is intended by
the party using it to have the same force and effect as the use of a
manual signature.  The use of a digital signature shall have the same
force or effect as a manual signature if it embodies all of the
following attributes:
   (1) It is unique to the person using it.
   (2) It is capable of verification.
   (3) It is under the sole control of the person using it.
   (4) It is linked to data in a manner that if the data is changed,
the digital signature is invalidated.
   (h) The use of an electronic signature or digital signature shall
have the same force or effect as a manual signature.
   (i) The application that is transmitted electronically pursuant to
subdivision (a) shall comply with all applicable federal and state
securities laws and regulations relating to disclosures to
prospective customers.  Unless those laws and regulations currently
require disclosures to be displayed or printed in bold, to be of
specific type or print size, and to be placed prominently at
specified locations within the application, the disclosures shall be
displayed prominently and printed in capital letters, in bold type
and displayed or printed immediately above the signature line.
Disclosures shall be written in plain English.  The full text of the
disclosures shall be contained in the application as required by this
subdivision.
   (j) Whenever a disclosure to a prospective customer is required
under federal or state law or regulation to be confirmed as having
been made, the application that is transmitted electronically
pursuant to subdivision (a) shall provide a means by which the
prospective customer shall confirm that he or she has read the
disclosure.
  SEC. 2.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect.  The facts constituting the necessity are:
   In order to ensure the validity of the increasing number of
brokerage agreements entered into through electronic commerce as soon
as possible, it is necessary that this act take effect immediately.
